Chapter 5 questions Student Version

Chapter 5 questions Student Version - Question # 1 Espresso...

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Question # 1 Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is $1,200 and the variable cost per cup of coffee served is $0.22. Required: 1. Fill in the following table with your estimates of total costs and cost per cup of coffee at the indicated levels of activity for a coffee stand. Round off the cost of a cup of coffee to the nearest tenth of a cent. Cups of Coffee Served in a Week Fixed cost. ........................ 2,000 ? 2,100 2,200 ? ? Variable cost ? ? ? Total cost. ........................ ? ? ? Cost per cup of coffee served ? ? ? 2. Does the cost per cup of coffee served increase, decrease, or remain the same as the number of cups of coffee served in a week increases? Explain.
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Question # 2 The Cheyenne Hotel in Big Sky, Montana, has accumulated records of the total electrical costs of the hotel and the number of occupancy-days over the last year. An occupancy-day represents a room rented out for one day. The hotel's business is highly seasonal, with peaks occurring during the ski season and in the summer. Month Occupancy-Days Electrical Costs January. ............... 1,736 $ 4,127 February . .............. 1,904 4,207 March . ................ 2,356 5,083 April .................. 960 2,857 May. .................. 360 1,871 June . ................. 744 2,696 July . .................. 2,108 4,670 August ................ 2,406 5,148 September . ............ 840 2,691 October . .............. 124 1,588 November. ............. 720 2,454 December. ............. 1,364 3,529 Required: 1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. Round off the fixed cost to the nearest whole dollar and the variable cost to the nearest whole cent. 2. What other factors other than occupancy-days are likely to affect the variation in electrical costs from month to month?
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Question # 3 The Lakeshore Hotel's guest-days of occupancy and custodial supplies expense over the last seven months were: Month March. ........... Guest-Days of Occupancy 4,000 Custodial Supplies $7,500 April. ......... ......... 6,500 $8,250 May ............. ......... 8,000 $10,500 June. ............ ......... 10,500 $12,000 July. ............. ......... 12,000 $13,500 August . .......... ......... 9,000 $10,750 September. ....... ......... 7,500 $9,750 Guest-days is a measure of the overall activity at the hotel. For example, a guest who stays at the hotel for three days is counted as three guest-days. Required: 1- Using the high – low method, estimates a cost formula for custodial supplies expense. 2- Using cost formula you derived above , what amount of custodial supplies expense would you expect to be incurred at an occupancy level of 11,000 guest –days?
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Question # 4 Harris Company manufactures and sells a single product. A partially completed schedule of the company's total and per unit costs over the relevant range of 30,000 to 50,000 units produced and sold annually is given below:
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This note was uploaded on 02/19/2010 for the course ACC 4300 taught by Professor Quinton during the Fall '99 term at Alabama A&M University.

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Chapter 5 questions Student Version - Question # 1 Espresso...

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